Believe it or not, you too can generate cash flows from areas that do not have big up and down swings and have lower taxes. Today, Paul Lizell talks to DJ Thielen, the owner of Fortune Foreclosures, about his baseball career and his career pivot after the birth of his son who had a medical need. DJ talks about the mindset investors must have to be successful as well as investing in virtual markets and how that has helped him get into the turnkey rental business. Learn more about how you can manifest your dreams with the homes you purchase and how you can generate a strong positive cash flow from them.
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Challenges Overcome While Investing Virtually In Other Markets With DJ Thielen
In this episode, I interviewed DJ Thielen. He is an interesting guy. He was drafted in the sixth round by the San Francisco Giants and played baseball in the Minor Leagues for a couple of years. We talked about how he had got a son and he had some health issues, he had to leave baseball and didn’t know what direction to go into as far as the business world. He was an entrepreneur. He did several things before he finally got into real estate investing full-time. He talks about the mindset, how important your mindset is in your approach. He’s good friends with Grant Cardone. Grant is a big mindset guy and DJ is a huge mindset guy and understands where your mindset needs to be. He’s out there in California in the San Francisco area and his main markets are Western Pennsylvania, Ohio and Indiana. The market there is hidden as well but those are great markets as far as they’re always level consistent. He does a turnkey operation out there and turnkey rental business. It’s a great area to do that, low-cost, decent rents and stable economies in those areas.
With me is a friend of mine, DJ Thielen. We have done business together. He’s an investor who lives out in California, but invest virtually. I love bringing people like DJ in who totally understand investing in different markets without themselves having boots on the ground or them themselves being the boots on the ground but hiring people. DJ, give us a little background on you and what you do.
I literally talked to a guy. Did I ever tell you, Paul, that my cousin is Adam Thielen?
Yeah. He’s still banged up.
People were like, “You were pro athlete, he’s obviously an athlete and you guys are both fast white guys. You’ve got to be related.” I don’t know and I just found out. As far as what I’m doing, you want to know where I came from.
Let’s start with what got you into real estate investing. Let’s go to your background. What brought you there? I know you were your baseball player. You played the Minors. You were a high draft pick by the San Francisco Giants. Start there and then get into your real estate group.
I was fortunate. I got drafted in ‘91. I was their sixth pick that year and I signed when I was nineteen. Back then, that was the first year Rookie Ball. It was a short-season A, but that was first year Rookie Ball. If you were a teenager, you’re supposed to go to a Rookie Ball, but my scout was like, “No, DJ was junior college played a year. He’s playing in an A Ball.” That year, the only teenagers in the league were the Northwest League up in Everett was me, a guy and three guys that had huge, Major League careers. Mike Hampton pitcher, Shawn Estes pitcher and a guy named Todd Hollandsworth and another. We were the only teenagers in the league that year.
Ultimately, I signed when I was nineteen. I grew up poor. When I got flashed $45,000, it looked $45 million. I signed and it’s what got on with life. I didn’t understand at that point not having a dad in a picture, having probably some anger issues. I didn’t understand how to deal with failure, which obviously translates really well into real estate. I wasn’t taught the things that I’ve come to know like you can control your emotions, you can control your thoughts or you can control who you’re friends with. For someone to control your outcome by your attitude. When I was young, I signed and blazed through the Minor League system was one of our top prospects. In ’95, I got a lady pregnant. My son was born in ’96. He had some breathing issues. I decided I was going to take a year off and go back.
I never went back. I found myself out of basically leaving my dream that I was dreamed of and searching, not knowing what to do. I took a minimum wage job. This was in ’96. I started working to take care of my son. About seven months after that, I was working for a company doing some telemarketing. I had a guy by the name of Chuck Roberts that he was a number one salesperson in the nation in this home security business. He started his first company and took me under his wing. Paul, having that mentorship that early after I left ball was huge. It was absolutely instrumental in the path that my life has went. I’m thankful to Chuck. I haven’t talked to him in a long time, but I’m thankful because he took me in and showed me.
You hear some of these guys, Tai Lopez who I know and he’s cool and stuff, but there’s so much information and some is true and some is BS. Nothing is going to be hard. People say, “Hard work is only 10% of the equation.” It is such BS. He taught me, “Show up at meetings at 5:00 AM,” before anyone’s up. Working, be the first one to the office and the last one to leave. I was his only sales rep for eight months. He took me under his wing at 25, 26 and taught me the things that were very vital to have success in life that had nothing to do with talent. Those are attitude, showing up, being present, being happy and being in a good mood when you’re with people. The things that I’ve come to appreciate but that was huge and that started me on my path to entrepreneurship.Don’t let your outcome dictate how you feel. You have to flip that and let your attitude dictate the outcome. Click To Tweet
Attitude is everything. When you have that positive attitude, when you’re always upbeat, no matter what, it makes everything better. Things do go smoother. More people like you, respect you and look up to you. It’s important to have that positive attitude. You talked about the failure too. Baseball is the ultimate sport for failure. Think about, if you’re a Hall of Famer, you’re batting 300 which means you’re failing 7 out of 10 times. It is the hardest thing to do for a lot of people who haven’t played out there. I was fortunate enough to play in college. The hardest thing to do is to hit a baseball, especially a 97 mile an hour fast ball with movement, a little cut fast ball change up and then you think when you lock down this guy on his 95 mile an hour fastball and next thing you know he throws you an 87 mile an hour change up there. You’re out in front of and you pull a foul. It is hard.
A four-seam riser from Billy Wagner at ’98.
Have you heard the story on Billy Wagner? Do you want to hear something that crazy? He was a right handed pitcher when he was in high school growing up. He broke his right arm, started throwing lefty and found out he had a blazing fast ball throwing left-handed. It’s a blessing for him to break his arm, find out he actually should have been a lefty and throw 100 miles an hour, which is true.
I played with Billy coming through the Minor Leagues.
He was unbelievable.
Hit one home run off him. He probably struck me out a lot more than that.
You got him for home or you did something? You didn’t give up many. He was a Philly’s closer for years and a good one. He did not give up many long balls. That’s an accomplishment. You got him in your book.
You said something too, Paul, sports in general, but especially baseball because you are failing at such a high clip. If I can give advice to anybody who’s reading this, if you’re an entrepreneur, if you’re starting out, the number one thing that I do is I wake up and exercise. The number one thing that I do that’s changed my life is I sit in the hot tub and I meditate for only about fifteen minutes and I do my gratitude of what I’m grateful for. I smile while I’m doing it. I was telling someone, “Sitting in the hot tub, sitting there smiling, I’ve got to keep my hands above the water.” People think I’m a weirdo or something, “What’s this guy doing over there in the hot tub?” Putting yourself in a happy state.
What I’ve learned, what I’ve come to know is if you can put yourself in a happy vibration because energy is vibration. If you can set your energy in a happy vibration first thing in the morning and it’s amazing. Be aware of trying to hold that throughout the day and not letting things toss it. If you do have something, come in and toss it for a second. I used to think what happened, Paul, in baseball, I struck out, that pissed me off or this happened and that made me mad. I had three hits and two homeruns, that made me happy but in actuality it wasn’t reality. What I’ve come to know is that how we feel will dictate the outcome. Our happiness and our emotion shouldn’t be dictated by what happens.
We should be happy in a happy state, happy vibration all day, every day. You’ll start to notice what I realized in my life. I’ve started to notice more stuff, like the universe morphing and the right people come into my life. Brandon Dawson, who’s one of my best friends, who’s Grant’s partner now, Brandon, showed and then you start noticing the right people showing up in your life. The ones that are haters or whatever, not supporting you or stabbing you in the back, you start to realize to not give as much energy to them and jump in and debate and have it out with them. You let them go away because they’re going to go make someone else’s life miserable anyway. Our actual attitude will dictate the outcome. If you’re letting your outcome to dictate how you feel, your happiness or your sadness, you have to flip that.
Attitude is everything and staying positive no matter what you do in life and you have to because you’re going to fail. You’re going to have houses that don’t go your way in real estate. The important thing is not to dwell on that but to move on, maybe take that loss and learn from it and compartmentalize. I like compartmentalizing things. I lost him in this one because I thought this market was whatever. I thought this one was in a better location. Whatever it is, understand that, learn that for the next deal so that you don’t make that same mistake.
You have to. The thing too, those of you that are in real estate, no matter if you’re wholesaling or flipping, my first experience buying out-of-state was in 2005. I sold a company and had some money. My wife and I were dating at the time. We went to a Robert Allen and Robert Kiyosaki event, the free event, “Come learn how to flip homes.” From that, we spent $4,000. We invested $4,000. We went to a weekend event. The big, thick books come away. I didn’t learn how to do things by reading about it or I didn’t learn how to hit a baseball or build a business reading a book. I said, “I have to take action and go in and I’ll figure it out as it goes along.”
I’ve jumped in. I bought a bunch homes out of state. I dealt with the wrong people. I had a crazy, horrible experience but that led me to out to these low-cost, low-risk parts of the country in PA. Definitely, it looks like PA but Pennsylvania, Ohio, Indiana and Michigan. These parts of the country that you can get investment properties that are low-cost, low-risk. Those of you that are reading this, you might not have been through something like grew up poor like me or had abuse or had massive ADD or had no dad. You might not have had those things, but you probably had some pretty messed up stuff happen. In life, we all have. I’m like all of you that are reading this. The thing that I come to realize is I stepped out in faith and tried something and when I left ball, I tried many different things.
This is back in the ’90s, the 800 toll-free numbers. I was always wanting to have my own thing. If you are doing this business, if you say, “Wholesaling doesn’t work or flipping doesn’t work or real estate isn’t for me,” that’s going to keep you self-sabotaging and suppressed. You’re going to manifest the exact thing that you’re scared of and you give emotion to anyways. If you’re, “This isn’t for me.” If you’re speaking life into that, you’re right, you’re done. You’ve got to realize there are more millionaires created from real estate than anything by far. It does work. I encourage you, no matter what you’re doing, building rental properties or cashflow or flipping or wholesaling or whatever you’re doing, find something that works for you.
Grant and Elena Cardone are good friends of mine and I know that they’re growing a massive company. They are on their jet and people are like, “Oh my God.” I’m like, “There’s the whole solopreneur, entrepreneur and everyone’s saying, you need to have a business and be a business owner.” No, you don’t. If you’re happy doing, flipping or wholesaling and making a $100,000 a year, living where you want, when you want and traveling the world, that’s what you should do. Don’t get caught up in seeing these people on social. First of all, a small fraction of these people are successful. First of all, understand that and then set a vision for your life.
I’ll share this, Paul, this is a big tip. If you want to manifest your dreams, it’s very simple. There are three steps. One is you create a vision board. The vision board should be your best version of you that you want to live in your life. How you want to look, spirituality, physically, mentally and emotionally. The car you want to drive and the house you want to have. The exact best version of you, get that on your vision board. When you have the vision board, put it up where you can see it in your office or home. Put it on your phone, on your screensaver. Put it on your computer, on your screensaver. I learned this from Steve Harvey. Everywhere you look, you’re sending these constant reminders and constant signals to the universe and your subconscious even more than anything that this is basically your life. That’s the first thing.
The second thing is you need to write out a perfect day. This is the perfect day of your life that you want to live, that aligns with that vision board. That vision board is your best life in all areas, spiritually, mentally, physically and then you write a perfect day that aligns your perfect day. It should be 3, 4 pages from the time you wake up to the time you go to sleep. If you could live one day over and over again like Bill Murray in Groundhog’s Day, what would that look like? Align it with the vision board. The next thing that’s the real key to having this stuff manifest fast is you need to write down and create a schedule and a routine and habits that are aligning with the person that’s on that vision board.
If you’re going to be that person, that best version of you and you’re not there, you’re going to have to do things different. What that means to you and what you want to do is say, “What time would this person wake up? What would they do when they wake up?” If you don’t know, go and search The Miracle Morning by Hal Elrod. That’s a good place to start. What time would they wake up? Would they work out? What music would they listen to? What would they listen to? Who would their friends be? Who would they hang around?
How would they talk? How would they think? How would that person self-talk be? Literally, start treating habits and routines that this person, that best version of you would live as if you’re doing it now. That’s where the work comes in. If you want that bad enough and you have a strong enough why that you realize you have one life on this earth, then that’s basically the vision board aligned with the perfect day, aligned with routines and habits that support those. If you can do that, you’ll be shocked at how fast you can manifest anything you want in your life.
It’s absolutely true. That vision board I know a lot of people have utilized that. I’ve done it over the years. It’s stuff I used to do and got away from. That vision board is something I need to have here on my wall to constantly remind me. We constantly change our visions too. It will adjust from year-to-year. Over the last year-and-a-half, I decided to acquire more rentals. That’s got to be on my vision board. I have started an information business. I got to put that on a vision board and see what we want to do with that and how we want to grow that. There are all these different things. The type of house you want to live and where you want to live. The type of vehicle, all these things are important. It need to be in your face every day. If they’re not in your face every day, you forget out of sight, out of mind. There’s an old saying there, it is truly important stuff that you are saying there.You're going to manifest the exact thing that you're scared of and give emotion to. Click To Tweet
A big thing too is who are you hanging around? I used to hear this and now I know it’s 100% fact. You are the average of the five closest people that you hang around. The good news is that’s in your control. You’ve been with friends with someone for many years, you can still be friends with them, but if it’s a negative energy and it is draining the life out of you, it’s your life. I talked to my son about this. You have to be responsible for your life. You can help people, but less effectively. Pretty soon you wake up and you’re 70 and because you spent so much time trying to help other people, you never became that best version of you. You lived 20%. Jesse Itzler talks about it, “I don’t want to live an 80% version of me.” I love when he says that. It’s spot on. From a real estate side, what questions or what do you want me to share?
I know you invest a lot in Western PA. I’ve sold a property there to you and Indiana and Ohio. Explain to the audience if you would, why those markets are so good? You did probably other properties in other different areas and had failures but there it is. You went to Sharon, PA.
That’s how we met. It’s funny because I told you, “I bought in Western PA over 2,500 alone in there,” and in other markets, since ’05 that I can remember. That is the first piece of mail that I got from somebody with an actual property right in the area that we’re buying. This was a sign for us to connect. That was the houses across the street from my project manager’s house.
It couldn’t be better than that.
We were like, “Are you kidding me?” It got off on a tangent. What do you want me to share with them as far as that?
What got you into Western PA and into Ohio and Indiana? What are the strengths of those markets? Obviously, we both liked them because they don’t have the big ups and they don’t have the big downs. You have pretty decent employment in those places. There are a lot of universities there, which helps with things. What drove you personally to those markets there?
With any investment, the higher the upside, the more landmines that there are going to be as far as risk. What drove me there was wanting to get more bang for my buck initially. I found that there were certain parts of the country I could buy homes in nice areas for $10,000, $15,000, $20,000, $25,000, that were worth $60,000, $70,000, $80,000, $90,000, $100,000. That was the first thing that drove me there was the shock and awe of the numbers. If you’re investing out of state, what you want to do is find a turnkey provider that you like and trust, that can actually has boots on the ground and can handle everything for you. That’s the first thing because that has seasoning. Ultimately, they’re going to know the area. They’re going to know what streets to buy. The two biggest areas that you’re going to struggle and have a tough time is property renovations, dealing with contractors from a distance and also a property management.
When you’re in a low cost region, you’ve got to remember not in a bad way. We have tons of people I become family with, but the mindset is different. The mindset is a lot different. You can’t do things the same way that you would do in California, in Indiana or Pennsylvania. I want them there and I want a scope work and I want to know what days they’re doing what and everything laid out. We’ll be lucky if they show up. That’s a little farfetched, but that’s probably the truth sometimes. It’s a different animal. The fast track, you can do it yourself but trust me, it is not for the faint of heart. Get with some people if you’re looking to invest out of state in low-cost, low-risk stuff. You can reach out to us. We’d be happy to help, but find somebody that don’t do everything on your own. Make sure that you have someone that can handle the renovations, that understands what stuff costs there and what you can get stuff done for. That can give you consistent updates with pictures.
You need a project manager on the ground. Don’t try to trust contractors to send you pictures and do everything. I’ve dealt with dozens and dozens of contractors in almost fifteen years. You are going to get ripped off. I’m telling you and it sucks to say that and I hate saying that, but your odds are 90%. They’re going to talk to you, “They sound great and they’re this. They love God and all these things,” and pretty soon, you ran off with it. When you do find a contractor out of state, you want to make sure that you are buying the material. This a big tip. Never have them go do a bid. It’s $20,000 because here’s what’s going to happen. They’re going to use the cheapest material, cut every corner they can so that they can line their pockets with that $20,000.
What you want to do and this is something that will help you if you’re renovating properties out of state is first, you buy all the material. Have them go to Home Depot. They can go to the desk. Home Depot would do a phone order. They put you on the phone with them and you can give the person that Home Depot your card number, they process it and they’ll email your receipt so you can see everything that you bought and that’s huge. That will save you a ton right there. I remember one time we were looking through years and years ago and I was like, “A pressure washer is $100. Who bought a freaking pressure washer?”
One of our contractors tried sneak in one in there and didn’t even tell us. Obviously, he was gone. You buy the material, do phone orders from Home Depot. If you’re buying lighting, mailboxes, knickknack stuff for the house, rugs or mosaic tile back splash. You can actually even go on Amazon if you want and buy it and pay for it and cart it. If you have prime, you can have it sent to the contractors’ home address. That’s something you can do as well. Those are two ways that you can control costs. As far as the contractor, this is what we do. We get an idea, “Let’s come up with an idea Joe on how many hours you think you’re going to be into this project?” What they want to make for the project? It shouldn’t be more than twenty an hour out there like anybody.
If it’s two guys and he’s paying one guy $10 and he’s making $20, that’s $30 an hour. If you agree that it shouldn’t take more than 80 hours, that’s $2,400. You can come to that up front and say, “If you finish sooner, obviously you make more. If you finish longer, you’re making a little less.” That’s how you can lock in a secure price and if contractors says, “I don’t want to do it that way.” Maybe you don’t need to work with them. Remember that when you’re renovating out of state, you’re the one that’s in control. It’s your investment. You do what you need to do in order to make sure that it’s protected. That will really help you limit. Otherwise, that $2,400 amount, they’re going to throw your price at $10,000. I’ll do it all for $10,000. If you break it down and have it make sense like I showed you, it will help.
With management, it’s the same thing. Find managers that are licensed. You can find ones that aren’t an outskirt areas if it’s a remote area. If you do, just make sure that you have a good feeling about them. You check some references and you get some good references on them. Make sure that the management company uses software to disburse payments that you can track. You can log onto the software, you can see what’s going on and you can see work orders. If you’re dealing with people that are taking money out of your check and not telling you that repairs were done until they send you a check, it’s a red flag.
If you cannot reach your property manager in some way or form on a consistent basis, get rid of them. They’re a bad communicator. Give people a chance but if they’re really bad, if they never answer their phone and you can’t email and they have no team and they’re a lone ranger, don’t use them. You’re going to set yourself up for an absolute nightmare. These markets can be great. You can buy a good deal but if you’re working either with a turnkey operation, if you want to lone ranger it and do it on your own and chance it, I would recommend making sure that you take that advice on working with the contractors and also making sure that you’re dealing with good management and you’ll be in good shape.
You are a turnkey provider out there in those areas, correct?
Yeah. We have a turnkey operation that we’ve done over 3,000 deals for investors. They’re people that work with us, they come to us, we go out locate the properties, the investments they want and get them forum. We buy them with our money. We secure and make sure the title is clean and then they buy them from us. We also have an Academy that we teach people exactly how they can do this on their own. How they can flip homes? Make big profits, have their money upfront and not have to wait. Imagine wholesaling on steroids, that’s what it is. It’s a different strategy than wholesaling, but you’re capturing your profits upfront.
It’s actually beautiful. It’s a good and effective way to do that.
You’re not having deals fall out. That side is called www.FlippingOnDemand.com and then our turnkey operation site is FortuneForeclosures.com. Those are ways that if people wanted to connect with us or connect with me even to reach out we’d be happy to help anything we can do. Hopefully, that gave some good mindset advice and some good tips because these out-of-state markets can be great. The thing that destroys the ROI is bad management, which is very prevalent in these areas and bad contracting and the inability to control the budget or understand like, “You’re in California,” and someone says, “I can rehab this whole house for $50,000.” You’re like, “$50,000, that’s it?” In actuality, it should be $18,000 for everything they’re doing. Keep that in mind. Don’t compare where you live to the same cost of these low-cost regions. Also even at Home Depot, the materials are less there, the labor is less. You’re going to realize you should be into these properties for a lot less than you should be. That’ll allow you to have some success.
The important thing about these markets too is if you’re doing something whether it’s California or New Jersey, where to higher price market, what you can do with is let’s say you have $250,000 to work with. You have $250,000 working capital. You might be doing a deal at a time and this other markets like New Jersey. If you go out to Western PA, Indiana, Ohio, you might be able to do 10, 15 deals at a time and get these things go and roll and diversify by itself. It’s one of the things I like about buying in the Midwest, Indiana, Ohio or Western PA and even different parts of Central PA too, is that I can have 10, 15, 20 deals going on at one time. This one settling this week, this one settling next week. I’m constantly having funds coming in instead of waiting for the one big one, waiting for the one big payday. It’s like diversifying a portfolio.
You do a lot of wholesaling.In any business, it is necessary to get rid of bad communicators. Click To Tweet
We do a lot of wholesaling locally here in our market. I do a lot of fix and flip. Not a lot, but I do a decent amount of fixed flips. I’m actually buying a house literally next door to my house, which is great. It’s going to be closest I’ve ever had for a fix and flip. I could really keep my eye on it. I’ve been picking up some duplexes here. I’m doing more on the rental side, one for tax write off the reasons because need to have some of those. If you’re wholesaling, you have much in taxes you end up paying. You need to have these other things to help offset it.
You take the profit you make, you reinvest it into other things. I’m not saying that my way’s the right way because it’s probably not. I saw my mom work her whole life, retire at 62 and die 29 days later from a heart attack. Her 401(k) went from $400,000 to $120,000. It’s great to plan for the future. First of all, if your money’s in a 401(k) get it out right now, I’m telling you guys, I was in the peak market in ’05, I was in this game when this thing crashed. My mom personally and those of you that are using a 401(k), you can contact us too. We can help you with that but get it out of a 401(k) with someone because her 401(k) from all the way to 2010, went from over $400,000 to $120,000.
That’s a catastrophic collapse there.
If she didn’t have help from my brother and I, she wouldn’t have been able to retire on $400,000 let alone $120,000. With the market peak and coming down get it out, get it into some hard assets and make your profits from the wholesaling and build that up and slowly start buying and holding properties for yourself. Pretty soon, like Warren Buffett says, “If you don’t learn to make money when you sleep, you work until you die.” Hopefully, that helped.
We needed mailbox money. Rentals do a good job with that. I do a lot with owner financing. Do you do anything with owner financing at all?
I did years ago. I’ve literally done probably three maybe a few 100 of those. I started doing it in ’06 through ’10 and then got away from it. The key is that people are doing owner financing, are you talking like land contracts?
Land contracts as much as possible. Keeping your names on.
Those can be great. The only thing about land contracts is, if you do, you can make a huge profit on them. That upside is great, just make sure that you’re doing it in a state because it is an actual eviction. We used to think that it’s not. When they have a land contract, a contract for deed, the same thing, they have an equitable interest. The magistrate will not allow you to file eviction on them. They will actually have you evict them. You can work something out to allow them to move out amicably, which obviously we always would try to do. Ultimately, you get that money. They move out. You get another deposit and you do it again. It’s a great strategy.
People still do want homeownership especially out in that Midwest region. There’s still program in that. In the West Coast here it’s like, “No, we rent,” but the programming is the American dream. The apple pie and baseball and that is huge. Owner financing out in those markets where you buy a home, you fix it, you’re into it for $50,000. You owner finance it for $90,000 you get $5,000 down or something and they pay $700, $800 a month and they are paying the taxes and the insurance and if something breaks and all that. Your ROI is actually a lot higher on those because they’re paying for all the expenses. That can be a good strategy to use too or out there in that region.
We do that and we do it mostly in that region, whether it’s Pennsylvania and Ohio. Ohio and Indiana potentially you have to record the installment contracts where in Pennsylvania you do not have to record it. If you get a big down payment though you’re going to have the equitable interest. If it’s a smaller down payment on a property, they could look at it as a security deposit. It depends on the magistrate there. You’ve got to be careful with it. I’ve had plenty go bad where I’ve had to redo them again, sell them to other people.
I’ve also had plenty that I’ve been paying for 5, 6, 7 years and paid themselves over multiple times and nice profits obviously. It’s nice getting the automatic payment there. It’s definitely a worthwhile method. Besides rentals, it’s a great one to have. That’s a great one to do it. The last question I wanted to hit you with here is where do you feel we are in this real estate market? Are we still up? Are we plateaued? Are we starting to go down? Where do you think we are? Obviously it’s dependent on where you live in a country as well.
I know that we’ve hit and we’re coming down. I don’t know. The reason I know this value’s here in California dropped, high-end luxury market here are destroyed and no one’s buying. It’s suffering. In Portland, Oregon, which is where I’m from, that market is peaked and come down and homes are selling. The market is flooded. I explain it like a clock, 11:00 is not quite at peak. 12:00 is right at peak, at the top of the market. 1:00 it’s hit and we’re coming down. I feel we’re between the 1:00 and 2:00 on there where we’ve hit, we’re coming down, but not quite enough where the masses know it yet and feel it. That we’ll hit about a four. Like everything, when you see these hot markets Portland, Oregon that were smoking hot on fire, 30% gross and now people aren’t able to sell their home.
What happens is everyone waits till the market is going down. They wait like a stock market. They buy the stock, they wait until it’s collapsing and then everyone rushes to sell. It’s the same thing what happens with the housing and that’s what’s happening. That’s a sign that we’ve peaked. We’re coming down off of it. I’ve had people say three months, I’ve had people say, some high level financial guys are all between 6 and 9 months. They feel absolutely going to happen this next year at some point. It’s great that you have multiple strategies and I always tell people have multiple strategies because if you’re wholesaling and only wholesaling when this hits, you are going to be crippled. There are two things that happen. I went through this before.
With wholesaling, you’re getting private deals that have equity. When the market collapses, the equity is gone. That’s the first thing that kills the wholesaling business. The second thing is that the inventory, the banks are flushing out inventory at $0.20, $0.30 on the dollar in these Midwest markets at least and stuff. Even in California, they’re flushing out inventory for way less than a wholesaler could ever get a private deal for it anyway. The ones that will survive are the big ones that have a following and are spending a lot of money on advertising. In the end of 2019 here, I advise you that if you’re doing wholesaling great and if you’re not doing, do something different.
Figure out a different method and we can help with that. If you’re doing well, then great but if not, do something different. Even if you’re doing good, don’t be caught up in thinking that, “My business is booming,” because of wholesaling is flipping. It’s market predicated. I went through the market cycle inside already I’ve experienced it. If you’re only wholesaling, I want to encourage you, it’s a great way to make money, but be careful that you’re setting up other ways to do deals. When that seizes, if all your eggs are in that basket, your income’s going to plummet.
You have to have multiple tools in the tool belt. You’ve got to be investing in different ways and you’re going to have to be in that point that you want to be in a stronger cash position so you can buy these good deals that are coming out there. In hindsight, it’s 2020 but I wish back in 2009, 2010 I had bought and held a few of these properties maybe for 3, 4, 5 years and resold them because of the value now to compare to what they were then was huge. We’re trying to get ourselves in a real strong cash position where we can take advantage of the next drop. I don’t think it would be a collapse like 2008 because short-term rates are so low. They’re constantly putting that monetary methadone in there, that drug that which is cheap money that allows people to go out there and keep investing and maybe carelessly to an extent. We’ll definitely drop. I don’t know how quick it’ll be, but I totally agree with you between 1:00 and 2:00 is where we are. We’re probably at 1:30 right now.
If you are stacked up or have a cash source that can come in with you and you can use money for deals like we’re setting up our own fund. What will happen is, when you scoop these deals up, when we’re at the bottom and maybe it’s small apartment buildings or single-families in really nice areas or whatever. When the market rises, when you do a cash out refi, that money you get is tax free. You buy it low, you let it rise. Maybe have $1.5 million of equity, you pull out $1 million and you get $1 million tax-free because you bought low, you let the market increase, you wrote it out, you moved the properties, you were patient and then you put $1 million tax-free. That’s a good game.
That’s how millionaires are made in real estate investing. I think 92% of the millionaires out there from real estate investing. It’s some insane number like that.
The best way to contact me is through Facebook. You can find me on Facebook at DJ Thielen. You can shoot me a message on there. The easiest way to reach me is to hit me up and shoot me a DM, a Direct Message on my Instagram. My Instagram is @D.J.Thielen. Connect with me on Instagram. Shoot me a direct message, “I heard you on Flipping Out. We’d love to talk to you. I’m looking to flip. I’m looking to wholesale. I’m looking to buy turnkey cashflow.” We have various departments with our company, we can help you pretty much with whatever you’re looking for. If it’s a good fit, we can definitely help alleviate some headaches for you.
DJ, we appreciate your time. Thank you so much for being on the program. I know the audience is getting a ton out of it. You dropped a lot of good nuggets of wisdom out there and I appreciate it. Thanks.
Thanks for having me. I appreciate you.
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About DJ Thielen
My life started out not so pleasant…I was a young kid with no dad, had massive ADD, Hated school, had some abuse, and on top of that was very poor.
Thank God for an AMAZING mom and grandparents that believed in me when I didn’t believe in myself. Due to that it allowed me to believe more and more in me and overtime break the chains of the LACK of mentality and create an ABUNDANT mindset that has changed my life forever. Plus God has his hand on me as well.
Always learning, anyways growing, and always getting better is just how I live my life. Seek and you shall find. A great miracle morning routine and positive mindset will change your life too…give it a try you have everything to gain and nothing to lose.